Self-Employed Expenses You Can Claim: The Complete UK Guide

The golden rule: wholly and exclusively

HMRC's test for allowable expenses is simple in principle: the cost must be wholly and exclusively for business purposes. If an expense has a dual purpose (both personal and business), you can only claim the business portion. A mobile phone used 60 percent for work means you claim 60 percent of the bill.

You do not need to keep every receipt for expenses under GBP 10, but you should still record them. For anything above that, keep the receipt or invoice. Digital records (photos of receipts, bank statements) are acceptable.

Office and premises costs

If you work from home, you can claim a proportion of your household costs: rent or mortgage interest, council tax, electricity, gas, water, broadband, and insurance. The simplest method is HMRC's flat rate: GBP 10 per month for 25-50 hours of work at home, GBP 18 for 51-100 hours, or GBP 26 for 101 or more hours.

If you rent an office or co-working space, the full cost is allowable. This includes rent, business rates, utilities, cleaning, and contents insurance for the workspace.

• Home office flat rate (GBP 10-26 per month) or actual proportion of costs
• Office rent, business rates, and utilities
• Office furniture and equipment
• Stationery, printer ink, and postage
• Business broadband and phone line

Travel and vehicle costs

Business travel is allowable. This includes train tickets, bus fares, flights, taxis, hotels, and meals during overnight business trips. Your regular commute between home and a permanent workplace is not allowable, but travel to temporary workplaces, client sites, and meetings is.

For vehicles, you have two options. The simplified mileage method uses HMRC's approved rates: 45p per mile for the first 10,000 business miles and 25p after that. Alternatively, you can claim the actual costs (fuel, insurance, repairs, road tax) and apply a business-use percentage.

• HMRC mileage rate: 45p per mile (first 10,000), then 25p
• Train, bus, and flight tickets for business travel
• Hotel and meal costs for overnight business trips
• Parking and congestion charges on business journeys
• Bicycle mileage: 20p per mile

Staff and subcontractor costs

If you employ anyone, their salary, employer National Insurance, pension contributions, and benefits are all allowable. Agency and temporary staff costs count too. Subcontractor payments are allowable, though if you operate in construction you must deduct CIS tax and file CIS returns.

Training costs for yourself or staff are allowable if they maintain or update existing skills needed for the business. Training for entirely new skills (for example, a plumber learning web design) is not allowable.

Professional fees and subscriptions

Accountancy fees, legal fees for business matters, and professional body subscriptions are all allowable. Trade journal subscriptions, professional indemnity insurance, and regulatory fees (such as ACCA or trade body membership) count too.

Bank charges, credit card fees, and interest on business loans are allowable. Hire purchase interest is allowable, but the capital repayment is not (the asset itself may qualify for capital allowances instead).

• Accountancy and tax advice fees
• Professional body memberships (ACCA, RICS, etc.)
• Professional indemnity and public liability insurance
• Business bank charges and loan interest
• Legal fees for business contracts and disputes

Marketing, advertising, and technology

Website hosting, domain names, email services, and cloud software subscriptions (Xero, QuickBooks, Microsoft 365) are all allowable. Advertising costs including Google Ads, social media advertising, printed materials, and business cards count too.

Computer hardware, phones, and tablets used for business are allowable. If the item costs under GBP 1,000, you can usually claim the full amount in the year of purchase using the Annual Investment Allowance. Software subscriptions are claimed as a running cost.

What you cannot claim

Some costs catch people out. You cannot claim fines or penalties (parking tickets, HMRC late filing penalties). Personal clothing is not allowable, even if you only wear it for work, but protective clothing, uniforms, and costumes are. Client entertaining (meals with clients, event tickets) is specifically blocked by HMRC, though staff entertaining up to GBP 150 per head annually is fine.

Drawings (money you take from the business for personal use) are not expenses. They are simply you accessing your profits. Similarly, you cannot claim for the personal portion of any dual-use expense.

• Fines, penalties, and parking tickets
• Personal clothing (even if only worn for work)
• Client entertaining and hospitality
• Personal drawings from the business
• The personal portion of any mixed-use expense

Capital allowances vs running expenses

Most day-to-day costs are running expenses, claimed in full in the year you pay them. But larger items (vehicles, equipment, machinery) may need to be claimed as capital allowances instead. The Annual Investment Allowance lets you deduct the full cost of qualifying assets up to GBP 1 million per year, so in practice most small businesses can claim everything immediately.

If you are unsure whether something is a running expense or a capital item, the test is whether it creates a lasting asset for the business. Repairing a laptop is a running expense. Buying a new laptop is a capital purchase (though AIA means you still claim it in full).

Key takeaways

• Expenses must be wholly and exclusively for business purposes
• Keep records and receipts for all expenses over GBP 10
• Use HMRC flat rates for home office and mileage if you want simplicity
• Client entertaining is never allowable, but staff entertaining is
• Capital items qualify for Annual Investment Allowance (up to GBP 1 million)
• Mixed-use expenses can be partially claimed based on business percentage

How we can help you

We specialise in:

• Self Assessment tax returns
• Bookkeeping and expense tracking
• Tax planning to maximise allowable deductions
• Cloud software setup (Xero, QuickBooks, Dext) for digital receipt management
• CIS returns for construction subcontractors

Not sure what you can claim? Book a free review and we will identify deductions you may be missing.